Mobile Banking Can Pave the Way for NFC

Google, Visa, MasterCard, Sprint, and even Pentagon Federal Credit Union. The list of early proponents of innovative near field communication tap and pay mobile technology keeps growing. But that brings two questions into sharp focus.

Is NFC in fact the one? And if NFC in fact is the winner, when will the fight end? Because, right now, aside from stray pilots (such as at PenFed and also Google’s NFC rollout with Sprint on the Nexus phone), NFC is thin on the ground. Sightings are rare, and those who can claim to have actually used it are not many.

So what should credit unions be doing about NFC right now?

That last one may be the easiest question to answer. “My advice to credit unions is to get their members used to using mobile banking right now. Do a very good job in mobile,” said Serge van Dam, a vice president at payments technology provider Fiserv. “Mobile payments will be widely used in 2012,” he predicted.

“But NFC will not,” van Dam added. “Not in 2012.”

He added that NFC will be much, much harder to implement at credit unions that have not already paved a smooth way with mobile banking.

His core argument is that by accustoming members to using phones as payment tools via mobile banking apps, it will be that much easier to nudge them into using the phone as a credit card replacement when NFC hits prime time.

But, stressed van Dam, “I would be skeptical about spending money on NFC if I were in credit union management. Not just now.”

“People are jumping the gun on a war that has not even started,” agreed Doug Hardman, CEO of Sparkbase, a mobile wallet developer headquartered in Cleveland.

“We know NFC will be the standard at some point,” added Hardman, who pointed out that NFC has all its big name backers, and it also is underpinned by good technology. “But it still lacks a standard that all the players have agreed upon. It is not ready for wide roll out.”

Right now, added Hardman, a lot of contentious haggling is occurring behind the scenes. Wireless carriers, for instance, want a piece of every transaction. So do mobile phone makers. Add in the credit card companies and merchants who have to be persuaded to install NFC ready terminals and to part with small fees to all the players and the scope of the task becomes plain. “I don’t see this in 2012,” said Hardman. He added, “2013 going into 2014 is when you will see NFC adoption really growing.”

Is it possible that another technology could dislodge NFC? Ciaran Bradley, an executive with Dublin, Ireland-based AdaptiveMobile, a network security provider, thinks not. “Right now, NFC has no compelling competitor except for pure cash.”

“The big news here is that both the carriers and the credit card companies are working to implement NFC,” said Craig Ochikubo, a vice president at Broadcom, the company that recently announced development of a standalone NFC chip. “There is starting to be progress in resolving the big issues.”

So, just maybe, NFC in fact is the one. But, according to what the experts are saying, there is no rush to take this plunge.

“Within 12 months you will see NFC in many more devices,” predicted van Dam. “But consumers will still need a reason to jump.”